David Cameron and Mario Monti leave the Chigi palace after failing to find a way forward in talks. Photograph: Tony Gentile/REUTERS

David Cameron and the Italian prime minister, Mario Monti, have failed at a meeting in Rome to find common ground on a controversial move to increase European Union budgets.

"My view is very clear," Cameron said in a press conference after the meeting. "At a time when governments have to make difficult decisions about spending, we cannot go on increasing EU spending. The EU has got to start living within its means."

The British prime minister has threatened to veto a planned 11% rise in the EU's 2014-20 budget, which would take it to €1tn (£800bn).

Monti, himself a former EU commissioner, politely disagreed at the conference. "Our positions are not perfectly in line on this," he said. His choice of words, he added, was an example of "British understatement". This drew smiles from Cameron.

Monti pointed out that Italy and the UK are net contributors to the EU, meaning they pay in more than they get out of the institution. But he added: "Even if we are a net contributor, we are, however, less convinced than the UK of the need for a consistent reduction in the EU budget."

As national governments increasingly handed over tasks to the EU, he said, "it seems natural that the EU should have the resources to carry out these extra functions".

Before touching down in Rome, Cameron stopped off in Holland to meet the Dutch prime minister, Mark Rutte, who is also calling for a crackdown on Brussels' spending. The seven-year budget is due for discussion at a 22-23 November meeting in Brussels.

Neither did any agreement appear to be in sight on the 2013 budget, despite a deadline of midnight on Tuesday for an agreement.

In Rome, Cameron did throw his support behind EU plans to free up €670m to support victims of the double earthquake that struck the Italian region of Emilia-Romagna in May. The UK was among EU member states that opposed the payout.

"I am happy that the UK government has given the green light," said Monti.